How SDM Advisors Can Help You Meet the CalSavers Mandate

If You Have 5 or More Employees, You Are Required to Provide a Retirement Plan in California

Beginning June 30, 2022, all California employers with 5 or more employees will be required to provide a retirement plan, like CalSavers or their own company-sponsored plan.

If you choose CalSavers, the state of California will be in charge of your retirement plan and your employees will be required to pay an annual fee ranging from 0.825% to 0.95%.  The fees will be pulled directly from their assets in the Roth IRA.  The program is free to employers and there are no employer fees.  Employers can not make matching contributions.  There are limited investment options to choose from, and the only plan is a Roth IRA.

If you do not meet the deadline, you can face penalties of $250 per employee.

Contact Us Today

Fill out the form below and one of our financial advisors will reach out to you to explain CalSavers and provide some alternatives that can save you money in the long-run.

We Have Retirement Plan Options.  Save Time and Money. We Create a Custom Plan For Your Company.

Control Your Companies Retirement Plan

CalSavers is a good option that helps you fulfill the retirement plan mandate but is limited and doesn’t provide a lot of flexibility.  Our team can provide you more flexible options that will save you money in the long-run, and keep you in control of your future.  We offer a couple of options:

  • One option is to create your own custom 401(k) retirement solution, allowing you and your staff to choose investment options, allow for company matching and provide more options than a Roth IRA.  We do the heavy lifting, help you customize the solution and do all the administration work with your staff.
  • A second option is bundling with our other small business clients, giving you your own custom plan, with the cost savings of a large group plan.  Sort of like going to Costco, by buying in bulk and grouping our clients together, we can provide you with excellent cost-savings that were previously only available to the larger employers.

Our advisors can save you money, help you administer the plan, all while meeting the California mandate.  Call us today for more information.

What is CalSavers?

CalSavers is Roth IRA’s only at this point. Eligible employees will be auto-enrolled at 5% of their gross pay if they do not opt-out, or make an election. Their contribution will also be Auto-Escalated each year by 1% up to a maximum of 8%. Federal Modified Adjusted Gross Income (MAGI) limits apply and each employee is responsible for opting out of the plan if they do not qualify for a Roth IRA.

Who is an Eligible Employee?

Any employee that is at least age 18, paid by W-2, and has worked for the business for 30 days.

What are the Employer Administration Requirements in the CalSavers Program?

Employers are required submit a full census to the state and track all eligible employees and offer them the plan within 30 days from their date of hire.

If the employee does not make an election within 30 days, the employer is required to auto-enroll the employee and set up their 5% Roth deferral via payroll deduction. They are also required to track and auto-escalate all employees by 1% every January 1st, up to 8%.

If the employee makes an election they must specifically opt-out the the auto-escalate as well. A notice must be provided to each employee 60 days before they are auto-escalated each year on Jan. 1st. unless they opt-out again.

Employers are required to hold an open enrollment meeting every 2 years on Nov. 1st – Nov. 30th to auto enroll the employees that opted out previously.

What are the Penalties for Employers?

There is no “cost” to register the business for the CalSavers plan. All fees are passed on to the individual employees participating in the plan.

The proposed penalties for non-compliance of either establishing an independent Retirement Plan, or not complying with the CalSavers requirements, start at $250 per eligible employee if the employer remains non-compliant after 90 days from being served a notice. The
penalties will increase to an additional $500 per eligible employee if non-compliance reaches 180 days or more after receiving a notice.

What Options Do California Employers Have?

Their are options for employers that will meet the mandate to make the employer an “exempt employer” and would be administratively more manageable if they set up their own independent retirement plan, outside of the state run plan.

Each employer will have different needs and objectives. Our role is to help them find a solution that works best for their business and will also make them an exempt employer from the new mandate.

Steve Mayer, CPA

Founder & Managing Partner

Dan Rush

Vice President

Cody Martin

Wealth Management Advisor

Therese Hjelm

Service Coordinator

Securities & Advisory Disclosure

Securities offered through Valmark Securities, Inc. Member FINRA, SIPC. Fee based planning offered through SDM Advisors, LLC. Third party money management offered through Valmark Advisers, Inc a SEC registered investment advisor. 130 Springside Drive, Suite 300, Akron, Ohio 44333-2431. 1-800- 765-5201. SDM Advisors, LLC is a separate entity from Valmark Securities Inc. and Valmark Advisers, Inc.

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